Toyota plans to build ‘competitive’ local EVs in China as it looks to play catchup
As Japanese automakers fall behind in the surging Chinese EV market, Toyota looks to turn things around. Toyota announced Monday it will boost local development of tech and software in China to produce “electrified vehicles that are competitive” where EVs are taking over the market.
Toyota boosts local EV development in China
A market once dominated by foreign automakers like Toyota and Volkswagen, China is now seeing an unprecedented surge in domestically built EVs.
On top of this, price cuts from the nation’s top EV makers, like BYD and Tesla, continue putting more pressure on other automakers.
To catch up, Toyota’s new plans call for accelerating local design and development of smart cockpits to enhance the driving experience with modern interior designs and built-in AI, something buyers in China are gravitating toward.
Toyota is also working with its top suppliers, Denso and Aisin, to speed up electric powertrain development.
The move comes after a report from Reuters claimed Toyota’s joint venture in the region with China’s GAC was laying off workers last week.
Toyota also plans to significantly reduce manufacturing costs through three initiatives. These include developing a local supplier base, reviewing parts designs, and reforming production and manufacturing to regain competitiveness.
CEO of Toyota China, Tatsuro Ueda, commented on the situation, saying:
The Chinese market is growing at an unprecedented pace. Toyota will also work together as a group to reform how we work & think to survive in China. By promoting local development with IEM by TOYOTA at its core, we will attempt to develop and provide competitive products that can satisfy Chinese customers at a fast pace.
Meanwhile, the automaker is sticking to its “multi-pathway” approach, which includes EVs, PHEVs, HEV, and FCEVs.
Electric vehicle urgency reaches Japan
Newly elected CEO Koji Sato stated during an interview after taking over in April, “We need to increase our speed and efforts to firmly meet the customer expectations in the Chinese market.”
Toyota already slashed prices on its first electric SUV in the region, the bZ4X, earlier this year. On top of this, the automaker issued a recall (over 12K units) for its first electric sedan, the BYD-powered bZ3, over defective door handles.
The automaker has already revealed plans to advance new EV technologies, including Giga casting to reduce manufacturing complexity, self-propelled production lines, hypersonic rocket tech to enhance efficiency, and next-gen batteries that will boost range while cutting costs.
Toyota plans to have engineers from its three joint ventures in China, BYD, FAW, and GAC, work on a “Toyota-led development project.”
Electrek’s Take
Japanese automakers, who have been slow to adopt purely electric vehicles, are falling behind in the world’s largest EV market, and it’s starting to take its toll.
Mitsubishi was the first Japanese EV maker to fall in China, announcing plans to suspend operations in the region indefinitely earlier this month. A company memo stated, “In the past few months, management and shareholders have tried to the best of our ability, but due to market conditions and with great reluctance and regret, we must seize the opportunity to transition to new energy vehicles.”
Mitsubishi, like Toyota, cited China’s transition from ICE to electric as reasoning. Mitsubishi’s sales have fallen from a peak of 134,500 in 2019 to only 34,500 this past year.
Other Japanese automakers are also seeing sales fall in the region, including Honda, Nissan, and Mazda.
Toyota’s sales in China fell 2.8% in the first half of the year, including a 12.8% drop in June. And it’s not only happening to automakers in Japan. They are just seeing some of the most drastic impacts. Other foreign automakers are also feeling the heat in China’s booming EV market.
Volkswagen has accelerated its EV efforts in the region, partnering with Xpeng Motors (through Audi) to use its tech platform, ADAs, and connectivity software to develop two new models.
Meanwhile, China’s EV market continues to get bigger, and domestic automakers like BYD, NIO, XPeng, Li Auto, and others are gaining their share.
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Tesla has been forced to reimburse a customer’s Full Self-Driving package after an arbitrator determined that the automaker failed to deliver it.
Tesla has been promising its car owners that every vehicle it has built since 2016 has all the hardware capable of unsupervised self-driving.
The automaker has been selling a “Full Self-Driving” (FSD) package that is supposed to deliver this unsupervised self-driving capability through over-the-air software updates.
Almost a decade later, Tesla has yet to deliver on its promise, and its claim that the cars’ hardware is capable of self-driving has been proven wrong. Tesla had to update all cars with HW2 and 2.5 computers to HW3 computers.
In January 2025, CEO Elon Musk finally admitted that HW3 also won’t be able to support self-driving and said that Tesla will have to upgrade the computers. 6 months later, Tesla has yet to communicate a plan for retrofits to owners.
Tesla is now attempting to deliver its promise of unsupervised self-driving on HW4 cars, which have been in production since 2023-2024, depending on the model. However, there are still significant doubts about this being possible, as the best available data indicate that Tesla only achieves about 500 miles between critical disengagements with the latest software on the hardware.
The situation is creating a significant liability for Tesla, which already needs to replace computers in millions of vehicles, and it may need to do so in millions more.
On the other hand, many customers are losing faith in Tesla’s ability to deliver on its promise and manage this computer retrofit situation. Some of them have been seeking to be reimbursed for their purchase of the Full Self-Driving package, which Tesla sold from $8,000 to $15,000.
A Tesla owner in Washington managed to get the automaker to reimburse the FSD package, but it wasn’t easy.
The 2021 Model Y was Marc Dobin and his wife’s third Tesla. Due to his wife’s declining mobility, Dobin was intrigued about the FSD package as a potential way to give her more independence. He wrote in a blog post:
But FSD was more than hype for us. The promise of a car that could drive my wife around gave us hope that she’d maintain independence as her motor skills declined. We paid an extra $10,000 for FSD.
Tesla’s FSD quickly disillusioned Dobin. First, he couldn’t even enable it due to Tesla restricting the Beta access through a “safety score” system, something he pointed out was never mentioned in the contract.
Furthermore, the feature required the supervision of a driver at all times, which was not what Tesla sold to customers.
Tesla doesn’t make it easy for customers in the US to seek a refund or to sue Tesla as it forces buyers to go through arbitration through its sales contract.
That didn’t deter Dobin, who happens to be a lawyer with years of experience in arbitration. It took almost a year, but Tesla and Dobin eventually found themselves in arbitration, and it didn’t go well for the automaker:
Almost a year after filing, the evidentiary hearing was held via Zoom. Tesla produced one witness: a Field Technical Specialist who admitted he hadn’t checked what equipment shipped with our car, hadn’t reviewed our driving logs, and didn’t know details about the FSD system installed on our car, if any. He hadn’t spoken to any sales rep we dealt with or reviewed the contract’s integration clause.
There were both a Tesla lawyer and an outside counsel representing Tesla at the hearing, but the witness was not equipped to answer questions.
Dobin wrote:
He was a service technician, not a lawyer or salesperson. But that’s who Tesla brought to the hearing. At the end, I genuinely felt bad for him because Tesla set him up to be a human punching bag—someone unprepared to answer key questions, forced to defend a system he clearly didn’t understand. While I was examining him, a Tesla in-house lawyer sat silently, while the company’s outside counsel tried to soften the blows of the witness’ testimony.
He focused on Tesla’s lack of disclosure regarding the safety score and the fact that the system does not meet the promises made to customers.
The arbitrator sided with Dobin and wrote:
The evidence is persuasive that the feature was not functional, operational, or otherwise available.”
Tesla was forced to reimburse the FSD package $10,000 plus taxes, and pay for the almost $8,000 in arbitration fees.
Since Tesla forces arbitration through its contracts, it is required to cover the cost.
Electrek’s Take
This is interesting. Tesla assigned two lawyers to this case in an attempt to avoid reimbursing $10,000, knowing it would have to cover the expensive arbitration fees – most likely losing tens of thousands of dollars in the process.
It makes no sense to me. Tesla should have a standing offer to reimburse FSD for anyone who requests it until it can actually deliver on its promise of unsupervised self-driving.
That’s the right thing to do, and the fact that Tesla would waste money trying to fight customers requesting a refund is really telling.
Tesla is simply not ready to do the right thing here, and it doesn’t bode well for the computer retrofits and all the other liabilities around Tesla FSD.
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Environment
BYD says its about to launch the ‘largest-scale’ smart driving software update in history
After hitting a major milestone on Monday, BYD claimed it’s about to unleash “the largest-scale smart driving OTA in history.”
BYD preps for the largest-scale software update
BYD announced on Weibo that there are now over 1 million vehicles on the road with its God’s Eye smart driving system.
The milestone comes after it upgraded 21 of its top-selling vehicles with the smart driving tech in February, at no extra cost. Even its most affordable EV, the Seagull, which starts at under $10,000 (69,800 yuan), got the upgrade.
BYD didn’t reveal any specifics, only promising “it is safer and smarter.” The Chinese EV giant has three different “God’s Eye” levels: A, B, and C.
The highest, God’s Eye A, is typically reserved for BYD’s ultra-luxury Yangwang brand, which utilizes its DiPilot 600 smart cockpit with three LiDARs.
God’s Eye B is used for other luxury and higher-end models, including those under Denza, which utilize DiPilot 300 and one or two LiDARs.
The base God’s Eye C system, used for BYD brand models, includes 12 cameras, five wave radars, and 12 ultrasonic radars, all supported by DiPilot 100.
Last week, BYD’s luxury off-road brand, Fang Cheng Bao, launched a limited-time offer for Huawei’s Qiankun Intelligent Driving High-end Function Package. The discount cuts the price from 32,000 yuan ($4,500) to just 12,000 yuan ($1,700).
After selling another 382,585 vehicles in June, BYD now has over 2.1 million in cumulative sales in the first half of 2025, up 33% from last year.
With the “largest-scale smart driving” update coming soon, BYD’s vehicles are about to gain new functions and safety features. Check back soon for more details.
BYD claims it’s “capable of leading the transformation and popularization of intelligent driving” with over 5,000 engineers dedicated to the field. As the world’s largest NEV maker, BYD said it’s committed to transforming the auto industry with safer and more sustainable solutions for global markets.
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Kia’s electric SUV is a hit in the UK. The EV3 was the most popular retail EV through the first half of 2025, pushing Kia to become the UK’s third top-selling car brand so far this year.
Kia EV3 leads as the UK’s most popular retail EV
The EV3 is Kia’s fastest-selling EV in the UK and a massive part of the brand’s success this year. Kia said the compact electric SUV contributed to its best-ever June, Q2, and first half EV registrations so far this year.
In January, the EV3 “started with a bang,” racing out to become the UK’s most popular retail EV. The EV3 was the best-selling retail EV in the UK and the fourth best-selling EV overall in the first quarter, including commercial vehicles.
Through the first half of the year, the Kia EV3 maintained its crown as the UK’s most popular EV with 6,293 registrations.
The EV3 starts at £33,005 ($42,500) as the ‘brand’s most affordable EV yet.” It’s available with two battery packs: 58.3 kWh or 81.48 kWh, providing a WLTP range of up to 430 km (270 miles) and 599 km (375 miles), respectively.
Kia sold 31,643 electrified vehicles in the first half of 2025. Although this includes fully electric vehicles (EVs), plug-in hybrids (PHEVs), and hybrids (HEVs), it still accounts for over half of Kia’s total of 62,005 registrations.
After opening orders for the EV4 last week, Kia’s first electric hatchback, the brand expects to see even more demand throughout 2025. With up to 388 miles WLTP range, it’s also the longest-range Kia EV to date.
Next year, Kia will introduce the entry-level EV2, which will sit below the EV3 in Kia’s lineup. Kia is looking to add an even more affordable EV to sit below the EV2. It will start at under $30,000 (€25,000), but we likely won’t see it until closer toward the end of the decade.
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